Stories
How Israel's Startup Nation Defied War to Post Record Economic Recovery
- •Israel's high-tech output rose by 8.2 per cent in real terms in 2025 to NIS 352 billion, reaching 18.3 per cent of GDP despite ongoing conflict.
- •Technology exports touched $85 billion, making up 58 per cent of Israel's total exports, while venture funding reached $14.6 billion.
- •Major acquisitions like Google buying Wiz and Palo Alto Networks acquiring CyberArk pushed exit values to record highs.
- •Ratings agencies S&P and Moody's upgraded Israel's sovereign outlooks to stable by early 2026, reflecting strong institutional continuity and repayment capacity.
- •Despite resilience, challenges persist including higher public debt, a 2.5 per cent slowdown in high-tech job growth, and shifting R&D operations abroad.
Key Questions Answered
High-tech output rose by 8.2 per cent in real terms in 2025 to reach NIS 352 billion, accounting for 18.3 per cent of GDP and roughly half of the country's economic growth. Exports reached $85 billion, and Israeli technology companies raised about $14.6 billion, which is 30 per cent more than in 2024.
In November 2025, S&P changed Israel's sovereign outlook from negative to stable while affirming its A rating. Moody’s followed suit on January 30, 2026, shifting the outlook on its Baa1 rating back to stable due to the state's stabilised financing capacity.
Prime Minister Narendra Modi’s February 2026 visit led to agreements covering cybersecurity, artificial intelligence, strategic technology, and agriculture, alongside plans for an Indo-Israel Cyber Centre of Excellence and an Innovation Centre for Agriculture. Their bilateral investment agreement subsequently entered into force on July 4, 2026.
